INSIGHTi

TikTok: Proposed Legislation and
Implications
March 15, 2024
On March 13, 2024, the House of Representatives passed the Protecting Americans from Foreign
Adversary Controlled Applications Act (H.R. 7521). This bill would make it unlawful for any entity “to
distribute, maintain, or update” a “foreign adversary controlled application” (hereinafter referred to as a
“covered app”) within U.S. jurisdiction, unless a “qualifying divesture” takes place within 180 days of the
bill’s enactment. The bill specifically identifies those operated by ByteDance, Ltd., and TikTok as foreign
controlled applications. As of March 15, 2024, the bill is not scheduled for a Senate floor vote.
Background on TikTok
The People’s Republic of China (PRC) government holds an equity stake and a board seat in the entity
that conducts ByteDance’s core business in China. Due to this, TikTok has faced scrutiny from
policymakers for potential privacy and national security risks. Critics allege the PRC influences
ByteDance’s content policy or may compel it to turn over user data in accordance with PRC laws that
codify the government’s ability to compel data access and require data localization in China. TikTok
has denied these allegations.
TikTok is banned on federal executive agency devices under the Consolidated Appropriations Act,
2023 (P.L. 117-328). Many states have banned the app on some or all state-owned devices. In May 2023,
Montana passed a state-wide ban on Tik Tok, but the ban was blocked by a district court in November
2023.
First Amendment and other legal issues associated with a forced divestiture or ban of TikTok and similar
platforms are discussed in other CRS products.
Overview of H.R. 7521
Forced Divestiture
H.R. 7521 would subject any entity that distributes, maintains, or updates a covered app to civil penalties
unless a “qualifying divestiture” takes place within 180 days of the bill’s enactment. For TikTok to
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continue to operate within U.S. jurisdiction through divestiture, ByteDance would likely need to sell its
U.S. operating subsidiaries to an entity that is outside PRC jurisdiction.
PRC officials have stated the PRC government would oppose a forced sale of TikTok, with China’s
Ministry of Foreign Affairs asserting on March 13, 2024, that H.R. 7521 and similar legislative proposals
use national security as a pretext “to willfully suppress other countries’ superior companies.” Several
analysts observe that such comments are at odds with the PRC government’s own policies that prohibit
U.S. and other foreign social media companies from operating in China. The PRC government could
leverage a wide range of tools, including export controls (social media algorithms are a controlled
technology under China’s Export Control Law), its equity stake in ByteDance’s China operations, or
China’s Data Security Law, to exert pressure on ByteDance to avoid a sale.
A divestiture consideration may be who would be willing and able to purchase the platform. TikTok
would likely be sold at a high price, given its large number of users and potential for future growth in
revenue. ByteDance was reportedly valued at $268 billion in a company share buyback in December
2023; however, the value of the U.S. version of TikTok is uncertain.
A high selling price may limit the entities that are able to purchase TikTok. Some large technology
companies—such as Apple, Google, and Meta Platforms—might be able to purchase TikTok, although
any proposals to do so might raise antitrust concerns.
Technical Requirements and Uncertainties of U.S. Ban
Section 2 of H.R. 7521 creates technical requirements for several types of online service providers.
Violations could lead to civil penalties as enforced by the Attorney General.
1. Entities distributing software apps through an online marketplace. For example, a mobile
app store operated by Apple Inc. or Google LLC would need to remove the covered app or inhibit
U.S. users from finding, downloading, installing, or updating the app.
2. Entities hosting the covered app. For example, a cloud computing provider or a content delivery
network (CDN) provider would need to stop hosting or delivering the covered app’s content or
inhibit U.S. users from accessing the app’s content and services.
3. Entities that own or control the covered app. For example, TikTok Ltd. would be required to
provide “all the available data related to” a U.S. user’s account (including posts, photos, and
videos) to the requesting user before the user loses access to the app. Such data is intended to
enable the user to transfer the content to “alternative applications.”
H.R. 7521 does not address the implications of U.S. users accessing a covered app through various
services that may bypass geographic restrictions. For example, if a user physically located in the United
States uses an IP address masking technology (e.g., a Virtual Private Network) to access a covered app by
appearing to be located outside of the United States or through services outside the United States, it is
unclear what entities, if any, could be held liable for app distribution.
Additionally, if individuals request their user data from a covered app operator, some might not have
sufficient equipment to handle and secure the requested information, which may create privacy or data
security risks if the released data contains personally identifiable information.
Users and Competition
The effect of H.R. 7521 on users and competition would depend on a covered company’s response. If a
company chooses to pursue a divesture, it might not affect users or competition. The effects would depend
on the purchasing entity. For example, if the purchasing entity operates an app similar to the divested app,

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it could reduce competition. The purchasing entity could also stop offering certain services, affecting
users.
If a company chooses not to divest its app, prohibiting the app from providing U.S. services might have a
financial effect on U.S. businesses that use the platform to advertise products, and individuals who are
paid to sponsor products because they have a large number of followers (i.e., influencers). Prohibiting the
app from providing services might also reduce competition, depending on the app’s market share. TikTok
estimates that there are 7 million U.S. businesses and 170 million active U.S. users on its platform. Some
influencers are reportedly lobbying Congress to reject H.R. 7521. Some TikTok users might switch to
other social media platforms, particularly those that offer short-form videos similar to TikTok, such as
Meta’s Instagram reels and Google’s YouTube shorts, potentially increasing their respective market
shares.

Author Information

Kristen E. Busch, Coordinator
Clare Y. Cho
Analyst in Science and Technology Policy
Specialist in Industrial Organization and Business Policy


Michael D. Sutherland
Ling Zhu
Analyst in International Trade and Finance
Analyst in Telecommunications Policy





Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
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